Why Avaya Buying Radvision Makes Sense (Updated: Deal Is Official)

Why Avaya Buying Radvision Makes Sense (Updated: Deal Is Official)Getting into the hot video market is important for Avaya, both to battle Cisco and as it approaches its IPO.

Getting into the hot video market is important for Avaya, both to battle Cisco and as it approaches its IPO.

Update: Avaya announced Thursday that it has concluded the deal to acquire Radvision for $230 million.

The rumors are back! Avaya is once again rumored to be acquiring Radvision but it looks like there are some teeth to the scuttlebutt this time. Globes, one of Israel’s business news sources, is reporting that Avaya is set to buy Radvision for $225 to $250 million. Globes also rightly points out that Radvision has struggled mightily since Cisco dumped Radvision in favor of its own infrastructure via the acquisition of Tandberg. At the time, Cisco was easily Radvision's biggest customer, so losing them came as quite a blow to the company. To me it seems obvious that the Zisapel brothers, who control Radvision, just do not have the vision to take the company to the next level, or really any level other than where it is now, so a takeout would seem to make sense.

While Radvision is generally regarded by people in the industry as a company that makes good stuff, they couldn't market themselves out of a paper bag. Like it or not, outside of a couple of markets you need good technology and strong marketing. Leaving aside Cisco and Polycom, who can obviously out-market Radvision, look at the job start up Vidyo has done in making itself a well-known brand in this industry. Juxtapose this with Magor, who had a similar solution long before but couldn't compare to Vidyo in sales and marketing, and we see what happens.

For Avaya, the move makes sense on many fronts. The company appears ready to IPO sometime in the near future, and having video be part of its growth story will likely be more appealing to potential investors than VoIP and other things, like CEBP, which is harder to understand. Video is hot and unlike in the past, this momentum appears to be sustainable. Right now Avaya's video strategy is the Desktop Video Device and partnerships, but that doesn't really allow Avaya to directly benefit from the growth of the video market.

Looking at the products, Radvision has a decent product line. Its SCOPIA Telepresence room and desktop-based solutions are all well built and can deliver a quality experience. I won't spend a lot of time on products, as anyone can go to the Radvision website and look them up, but the company does have a strong mobile video play, which fits well since Avaya has been trying to amp up its video messaging. Addtionally, Radvision has an excellent voice and video management tool which Avaya should be able to leverage with direct sales, but also to beef up its managed services business.

A couple of other points of synergy for Avaya: Radvision has a set of voice and video developer tools that fall under the brand of "BEEHD". For those that don't know BEEHD, it's a software platform for developers to use to integrate video into applications. In many ways, it's the video equivalent of Avaya's ACE software suite. Anyone that knows me knows I'm a huge fan of the work Eric Rossman and company have done in building Avaya's developer program, DevConnect. BEEHD seems like a great complement to the program and would allow Avaya to quickly add a bunch of developers focused on video applications.

Lastly, let us not forget about the impact this could have to the data-networking group. Newly appointed network chief Marc Randall has seen first-hand from his days at Cisco the impact that video can have on networking. In fact Silver Lake board member and fellow Cisco alum Charlie Giancarlo used to say that every dollar of video would drive $5 in network sales. (If I’m not recalling this exactly right, my apologies to Charlie). Having video would enable Avaya to better their end-to-end story. Without video, Avaya can still attach network infrastructure to its voice base but then, if the customer is looking at video, they may look at Polycom--which isn’t the end of the world for Avaya--but if the customer chooses to look at Cisco video, now Avaya stands to lose the whole kit and kaboodle. Anyone that's ever competed with Cisco sales knows that once Cisco is in an account, they'll never leave.

The only concern I have regarding this acquisition is that Radvision is Israeli based and often Israeli companies are hard to integrate into organizations. The culture at Radvision (and really all the Rad companies) has always been engineering first, whereas, at least since the Bell heads left Avaya, the company has turned into a much better marketing organization. Although not as funny and slick as Lou D’Ambrosio, the low-key Kevin Kennedy has done a good job keeping the marketing momentum going.

I've seen the culture clash between opposing priorities like this take what would appear to be a good purchase and make it yet another failure in the long history of failed acquisitions across tech. On the positive side though, Nortel was very much an engineering-first company (as a fellow Canadian I know the only marketing we know is "skate to where the puck is going to be"), and Avaya did about as good a job as I've ever seen integrating the two companies together.

So if the acquisition does come to pass, it's a good move for Avaya and squarely puts them in one of the hottest markets we've seen in communications in a while.

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